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Four different proprietorships, Jupiter, Mars, Saturn, and Venus, show the same balance sheet data at the beginning and end of a year
Four different proprietorships, Jupiter, Mars, Saturn, and Venus, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of owner's equity, are summarized as follows:
| Total Assets | Total Liabilities | |
| Beginning of the year | $550,000 | $215,000 |
| End of the year | 844,000 | 320,000 |
On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year.
Jupiter: The owner had made no additional investments in the business and had made no withdrawals from the business.
Mars: The owner had made no additional investments in the business but had withdrawn $36,000.
Saturn: The owner had made an additional investment of $60,000 but had made no withdrawals.
Venus: The owner had made an additional investment of $60,000 and had withdrawn $36,000.
Expert Solution
Change in assets = Total assets (End) - Total assets (Beginning)
Change in assets = 844,000 - 550,000
Change in assets = $294,000
Change in liability = Total liabilities (End) - Total liabilities (Beginning)
Change in liability = 320,000 - 215,000
Change in liability = $105,000
Change in equity = Change in assets - Change in liability
Change in equity = 294,000 - 105,000
Change in equity = $189,000
Earnings before the withdrawal = Change in equity + Amount withdrawal
Earnings before the withdrawal = 189,000 + 36,000
Earnings before the withdrawal = $225,000
Earnings before making the investment = Change in equity - Investment
Earnings before making the investment = 189,000 - 60,000
Earnings before making the investment = $129,000
Earnings = Change in equity - Investment + Amount withdrawal
Earnings = 189,000 - 60,000 + 36,000
Earnings = $165,000
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